Risk of losses on unprofitable orders

「In the current consolidated fiscal year, personnel expenses, recruitment expenses and IT expenses increased in line with the expansion of the business, as did office expenses associated with the office relocation and expansion. In addition, investment expenses aimed at achieving future growth, primarily by strengthening the software business, increased, and a provision for loss on orders, a nonrecurring expense, was recorded.」

「Provision expense for loss on orders included in cost of sales　△¥43.681 million」

「Change in provision for loss on orders (△ indicates a decrease)　△¥46.263 million」

「Provision for loss on orders 61,594 174」

「Provision for loss on orders 61,594 32,063」

「Provision for loss on orders 17,743 39,356」

「Provision for loss on orders 17,743 8,495」

「Provision for loss on orders 17,743 15,268」

「Provision for loss on orders 74 22,800」

「Provision for loss on orders 74 —」

「Provision for loss on orders 74 10,365」

「Provision for loss on orders 15,887 —」

「Provision for loss on orders 15,887 3,599」

「Provision for loss on orders 15,887 30,182」

「Provision expense or reversal (△) for loss on orders included in cost of sales　¥55.748 million　△¥44.171 million」

「Provision for loss on orders 60,058 50」

「Provision for loss on orders 60,058 613」

「Provision for loss on orders 60,058 —」

「In the consolidated accounting-related business, revenue increased to ¥8,034 million, up 10.6% from the previous consolidated fiscal year, mainly because large projects won in the previous consolidated fiscal year continued to contribute to revenue. The profitability of these large projects has been trending slightly lower, and costs to support their production launch are expected to increase in the following consolidated fiscal year, so a provision has been recorded in preparation for this.」

「Provision for loss on orders 4,310 1,379」

「Provision for loss on orders 4,310 —」

「As the effects of efforts to improve quality gradually emerged, the occurrence of unprofitable projects was kept to an extremely low level, resulting in operating profit of ¥244 million, up 68.1% year on year.」

「The provision for loss on orders decreased from ¥112.912 million at the end of the previous consolidated fiscal year to ¥4.310 million at the end of the current consolidated fiscal year.」

「Provision for loss on orders 112,912 89,061」

「Provision for loss on orders 112,912 89,760」

「Provision for loss on orders 112,912 99,592」

「In terms of expenses, we recorded a provision for loss on orders of ¥112.912 million to address unprofitable projects.」

「On the other hand, a provision for loss on orders of ¥52.983 million for addressing unprofitable projects」

「However, in addition to some additional costs incurred to address defects in a project for which we had been forced to record provisions for loss on orders several times through the previous consolidated fiscal year, other unprofitable projects arose because of problems with estimates and progress management. As a result, we recorded a provision for loss on orders of ¥28.545 million in total.」

「For an unprofitable project for which provisions for loss on orders had been recorded several times through the previous consolidated fiscal year, acceptance testing was completed in August 2016, and the project was finally able to move into the maintenance phase.」